Manufacturers are increasingly pursuing direct online sales to end users these days, and with that comes the challenge of more, but smaller, shipments. When you’re built for pallets and cases and you’re shipping onesies, you face new challenges. The rise of e-commerce has made the integration of logistics and distribution a integral part of operational competency.

Moving from a manufacturing and wholesale environment to a direct sales model for e-commerce may require more employees, fixtures or space. Instead of loading pallets into trucks, you may be staging small shipments in boxes. Documentation and labels multiply, and new types of equipment may be needed along with everything from tape and packing materials to racks and printers.

Is it worth it? Dave Turbide, a New Hampshire based consultant and APICS certified CPIM makes the point in a recent article in APICS Magazine that, in fact, you may not have much of a choice. E-commerce is growing so quickly that some manufacturers have found they have no choice but to direct-ship to customers. The question becomes one of whether to do it yourself, or engage a third party.

Turbide suggests a few questions, taken from APICS’s CPIM body of knowledge, to ask if you’re facing that question yourself:

Is the activity strategically important?

Does the company have specialized knowledge?

Is the company’s operations performance superior?

Is significant operations performance likely?

If you answer yes to one or more of these questions, Turbide suggests careful exploration and to consider the cost-service trade-offs involved either way. If you can answer no to most or all, then outsourcing may be the way to go. Just remember that e-commerce is not going away, and only likely to grow. It can become a vital link in your customer relationship experiences. You may want to “cultivate positive workings relationships with package delivery services” like UPS, FedEx and others.

It’s worth noting the following survey statistics recently produced by PwC. When asked “Which of the following channels are companies using to generate sales,” respondents indicated:

Continuing our earlier threads… There are fundamental differences between integrated websites, and non-integrated (see previous two posts). We looked in our last post at the differences – and the impact – of how you add a customer in both types of systems. Now, let’s look at order status, products and ordering…

Displaying Order Status & Account History – Integrated Version

As shipping takes place in accounting record, order records reflect new shipping information. The updated order data is updated automatically to the web site as it changes, and customers can view the current status in real-time.

Customers can look at past invoices, and they can reorder products they have purchased in the past both from the web site and through conventional sales over the phone.

Displaying Order Status & Account History – NOT Integrated Version

Customers can call you to check on their shipments and request that you fax them statements or past invoices.

Display Product Information – Integrated Version

You can display product part numbers, descriptions, availability and pricing based on the data and rules that are established in the accounting system.

Display Product Information – NOT Integrated Version

You have to maintain the data and business rules in two databases. This often leads to customers getting the wrong price.

Activate Existing Customers So They Can Order On-Line – Integrated Version

Existing customers can activate their web account at the web store by entering two or three key pieces of information, such as customer number, invoice number, and telephone number.

The web store uses this information to find the customer’s existing account. The user does not have to enter their address information.

Activate Existing Customers So They Can Order On-Line – NON-Integrated Version

Existing customers register all new information. In most cases a duplicate customer record is created. A manual reconciliation can be done to delete the old or new customer record to eliminate the duplicate.

So, by now, you have the idea. (Giving credit again where due, these comparisons come from our good friend Dave Harris, at EC Internet.)

Integrated websites require a deep understanding of all the underlying technologies of both your business management system and your web store needs.

We have seen over the past few years a gradual shift, moving faster now I might add, from the old static websites to the integrated ecommerce engines described in these last three posts.

It’s no longer a novelty, it’s a business capital investment – one that can yield enormous revenue benefits (we’ve seen clients rocket up to millions in online sales in surprisingly short time). As such, it warrants a good plan, and a commitment to execution over time. Like all the best business ideas, it’s not an event, it’s a process. A process of continuous improvement over time and dedication to the principles of sound, steady growth based on today’s technologies.

In our previous post, we noted that there are websites, and then there are integrated websites. The former are mostly informational and generally static, with (at best) rudimentary abilities to configure product choices by customers or order product in any way that is actually integrated with the back-end accounting and inventory software of the host company’s site. Usually, an order is really just an email sent to someone at the host company, who then must re-type all that information back into the actual order processing / accounting system.

An integrated website has a few meaningful characteristics that set it apart, and make it a lot more functional – an actual e-commerce tool that allows you to transact business.

Our friend David Harris, founder of web consulting and webstore developer EC Internet notes a few of the key differences in areas like managing customer information, order status, shipping information and product information.

Today we’ll look at a simple thing like adding customers and note just a few of the key differences between an integrated and non-integrated website:

Adding Customers – Integrated Version:

New customer record created automatically in accounting. A web serial number is placed in the customer record to provide an audit trail.

An accounting system customer number is generated automatically that matches the customer numbering system used by the company.

Sales person, territory, and account settings are all automatically established when the customer is added.

If the customer changes their contact information on the web site, the change flows down to the accounting system.

If you update customer information in the accounting system, then the change flows up to the web site.

Adding Customers – NOT Integrated Version:

New customer record created automatically in accounting. A web serial number is placed in the customer record to provide an audit trail.

An accounting system customer number is generated automatically that matches the customer numbering system used by the company.

Sales person, territory, and account settings are all automatically established when the customer is added.

If the customer changes their contact information on the web site, the change flows down to the accounting system.

If you update customer information in the accounting system, then the change flows up to the web site.

In our next post, we’ll look at the comparison across other types of information like products and order status, to come to a fuller appreciation of the real value of a truly integrated web solution.